Capital A (formerly AirAsia Group), the parent holding of AirAsia (AK, Kuala Lumpur International), says its subsidiary AirAsia Aviation Group has entered into a 51/49 joint venture with hospitality group Sivilai Asia to launch AirAsia Cambodia (CAM, Phnom Penh).

The two companies said that subject to regulatory approvals and certification, the new LCC should launch in the second half of 2023. Capital A Chief Executive Tony Fernandes told Bloomberg that AirAsia Cambodia would launch with two aircraft, most likely A321-200Ns, and later expand to as many as 15.

"2022 was about restarting our airline to pre-COVID levels. That machine is in place and will be completed by the second quarter of 2023. The second half of 2023 will be when we focus on our continued efforts in growth. We are confident of profitability in the first year. As Cambodia is a market that is familiar to us and where we have deep infrastructure in place," he said.

In a Bursa Malaysia disclosure, Capital A clarified that the initial capital contribution would be USD5 million. Capital A, as the majority shareholder with a 51% stake, will invest USD2.55 million and Sivilai Asia - USD2.45 million. The investment would be paid in three tranches - the first USD2.5 million upon the execution of the JV agreements, the second USD1.5 million within the next three months, and the final USD1 million at least one month before the start of operations. Capital A expects that in the long term, AirAsia Cambodia's paid-up capital will increase to USD25 million.

The group did not disclose any specific routes but said it would focus on connecting Phnom Penh, Siem Reap, and Sihanoukville with existing points in its ASEAN network, as well as India, China, and North Asia. It would operate within a four-hour radius from its Cambodian bases.

Capital A said it would focus on AOCs in the ASEAN countries, following the bankruptcy of AirAsia Japan and the divestment from AirAsia India. Besides AirAsia and AirAsia X in its home market, Capital A has stakes in Thai AirAsia, Thai AirAsia X, Indonesia AirAsia, and Philippines AirAsia. Its previous attempts to enter other ASEAN markets - not just Cambodia via AirAsia Cambodia (2017) (Phnom Penh) - but also Myanmar and Viet Nam - faltered before COVID.